Bitcoin (BTC) market sentiment has turned bearish, with Wall Street’s tech-heavy Nasdaq futures trading 700 points lower. The risk aversion is fueled by concerns that cost-effective Chinese artificial intelligence startup DeepSeek could significantly challenge US technological dominance.

Bitcoin’s perpetual futures funding rates, periodic payments made between long and short positions in perpetual futures contracts, have turned negative, according to data source Velo Data. It is a sign of more bearish sentiment in the market – traders are chasing short positions in anticipation of lower prices.

The leading cryptocurrency by market capitalization has fallen more than 3% since early Asian hours, hitting lows below $98,000 at one point, according to CoinDesk data. Futures tied to the Nasdaq are down more than 3.5%, with NVIDIA, the bellwether for all things AI, down 10% in premarket trade.

“Today’s selloff comes after President Donald Trump last week gave the go-ahead to a crypto policy task force that notably stopped short of confirming that the U.S. would create a bitcoin reserve. Meanwhile, Chinese artificial intelligence startup DeepSeek looks to to have spooked tech stocks as its success suggests it’s possible to build AI models that cost less than AI companies in the US,” Petr Kozyakov, co-founder and CEO of Mercuryo, said in an email.

Historically, however, the negative flip in financing rates has tended to mark local price bottoms. In addition, there is always a risk of a short squeeze – bears throw in the towel and shelve their bets, putting upward pressure on prices. That said, funding rates have narrowly turned bearish, meaning it’s too early to call short BTC a crowded trade.